AirAsia India's flight launch may trigger fare war

In a move that is likely to trigger price war in the aviation industry, new low cost airliner AirAsia India today said its maiden flight on Bangalore-Goa route on June 12 will cost just Rs 990 including taxes.

The airline will open the bookings this evening on its website, AirAsia India CEO Mittu Chandilya said.

"Our collective goal is that every Indian should have an opportunity to fly. We have our plane parked here already", he told reporters here.

Earlier, Chandilya had told PTI that the airlines' fares will be about 35 per cent lower than the current market rates.

"June 12 would be the first flight. It will be A320 (aircraft). The timing of the flight will be around 3pm from Bangalore to Goa, and then back from there (Goa) around 6'0 clock," Chandilya said, adding that the airline is not looking at operating from Delhi and Mumbai for now.

AirAsia India, a joint venture between Malaysian carrier AirAsia, Tata Sons, and Arun Bhatia's Telestra Tradeplace, was granted flying licence by aviation regulator DGCA earlier this month after 9-month-long wait and various legal hurdles.

In anticipation of the airline's entry into the Indian market, no-frill airlines such as SpiceJet and IndiGo have forced all other carriers to offer discounted fares over the past few months.

AirAsia India's offer of Rs 990 including taxes is likely to now force other carriers to review fares on this sector on the same day, which now cost around Rs 5,000 one-way.

"AirAsia will be opening up the bookings this evening. By 9.30 pm our fares will be up there on our website. Our first route will be from Bangalore to Goa and Goa to Bangalore. We are very excited about that," Chandilya said.

To a query, on the airline total load factor, he said: "I would love to have 100 per cent load factor. But 60 per cent will be reasonable. For the fare we are going with Bangalore-Goa. It will be Rs 990 inclusive of taxes," he said.

Asked about other airlines mulling reduction in airfares, he said: "Frankly, my view on that is it will help companies to rationalise costs. That is the way, I look at it."

On the expansion plans, he said the airline during the current financial year would connect 10 cities across the country with 10 aircraft.

"We have a plan. Our hope is that in this financial year we will probably add about 10 cities. For that we will have about 10 aircraft. Turnaround time will be anywhere between 25 minutes and 35 minutes," he said.

Declining to reveal the name of the cities, Chandilya said that at this point of time the company would not look at entering Mumbai and New Delhi.  On investments made for India operations, Chandilya declined to reveal any figures but said the major investments were made on its employees.

"Investments what we made are our employees. We have around 300 employees now. I think we will manage our financials. We have enough cash to do what we need", he said.

On reaching breakeven, he said: "I really want to breakeven within four months. I have already said this some time back. I don't want to change that stance."

Responding to a query on the domestic aviation industry, he said, "I think, the (aviation) infrastructure is the biggest constraint. Previous (Manmohan Singh government) administration decided to have 15 low cost airports. For us we need more airports and longer runways for the A320s."

To a query on whether it was "concern" for AirAsia as the new Aviation Minister was looking to review the aviation policy and other initiatives taken by previous government, he said that "it is not a concern. He can review all the operating licenses. I am not worried about that.

"I am really bullish about India. It is right time to comer. We, as an airliner hoping to change the aviation industry".

On why it chose to launch service between Bangalore-Goa despite having its base in Chennai, Chandilya said the State governments were very supportive of the airliner and Karnataka was "more happy to have us".

He said AirAsia would have its base both out of Chennai, Bangalore.

Chandilya clarified that the aircraft will not have specific business class or section like other airline operators but will have "hot-seats" spread across the aircraft offering more legroom and comforts. "Yes it will be costing little bit more (than the regular fares," he said.